Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Notices 22741 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3Alpha Indexes measure relative total returns of 

one stock and one exchange-traded fund share 

(‘‘ETF’’) underlying options which are also traded on 

the Exchange (each such combination of two 

components is referred to as an ‘‘Alpha Pair’’). The 

first component identified in an Alpha Pair (the 

‘‘Target Component’’) is measured against the 

second component identified in the Alpha Pair (the 

‘‘Benchmark Component’’). Alpha Index Options 

contracts will be exercised European-style and 

settled in U.S. dollars. See Securities Exchange Act 

Release No. 63860 (February 7, 2011), 76 FR 7888 

(February 11, 2001) (SR–Phlx–2010–176). 

20549–1090. All submissions should 

refer to File Number 4–626. This file 

number should be included on the 

subject line if e-mail is used. To help us 

process and review your comments 

more efficiently, please use only one 

method. The Commission will post all 

comments on the Commission’s Internet 

Web site (http://www.sec.gov). 

Comments are also available for Web 

site viewing and printing in the 

Commission’s Public Reference Room, 

100 F Street, NE., Washington, DC 

20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

All comments received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

FOR FURTHER INFORMATION CONTACT: 

Owen Donley, Chief Counsel; or Lori J. 

Schock, Director, Office of Investor 

Education and Advocacy, at (202) 551– 

6500, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–2551. 

Discussion 

Section 917 of the Dodd-Frank Act 

requires the Commission to conduct a 

study of financial literacy among 

investors and submit a report on the 

study to the Senate Committee on 

Banking, Housing, and Urban Affairs 

and the House of Representatives 

Committee on Financial Services no 

later than two years after enactment of 

the Dodd-Frank Act, that is, by July 21, 

2012. 

The study mandated by Section 917 

includes a number of specific 

components, including that the study 

identify: the existing level of financial 

literacy among retail investors; methods 

to improve the timing, content, and 

format of disclosures to investors with 

respect to financial intermediaries, 

investment products, and investment 

services; and methods to increase the 

transparency of expenses and conflicts 

of interest in transactions involving 

investment services and products. In 

addition, Section 917(a)(5) requires the 

study to identify ‘‘the most effective 

existing private and public efforts to 

educate investors.’’ The Office of 

Investor Education and Advocacy 

(‘‘OIEA’’) is currently reviewing existing 

private and public investor education 

efforts of which it is aware. The 

Commission is soliciting public 

comment to help ensure that the study 

includes all relevant programs, as well 

as to better understand the details and 

effectiveness of these programs. 

All interested parties, including those 

organizing or operating investor 

education programs and program 

attendees and participants, are invited 

to submit their views on one or more of 

the following questions: 

(1) Have you attended, or does your 

organization operate, organize, sponsor, 

promote, or host, any investor education 

programs? Please describe the program, 

including its duration, target audience, 

and any measurable goals and objectives 

aimed at changing investor behavior. 

What specific topics are covered in its 

curriculum? 

(2) What do you consider the most 

important characteristics of an effective 

investor education program? 

(3) What programs do you view as 

most effective? 

(4) Has your organization or an 

independent third party evaluated any 

of your organization’s programs? If yes, 

please describe the findings of the 

evaluation, including any statistical 

evidence of how your program 

effectively changed one or more investor 

behaviors among participants. 

(5) Are any of your organization’s 

programs national in scope? If not, 

could any of these programs be 

replicated or expanded to reach a 

national audience? 

(6) What types of investor behaviors 

or other topics do you think investor 

education programs should focus on? 

Why? 

(7) Which best describes you or your 

organization? 

a. Public, Federal government 

b. Public, State or local government 

c. Not-for-profit 

d. Foundation 

e. Private/business 

f. Individual 

g. Other (describe) 

(8) Do you have any other comments 

regarding the effectiveness of existing 

private and public efforts to educate 

investors? 

By the Commission. 

Dated: April 19, 2011. 

Elizabeth M. Murphy, 

Secretary. 

[FR Doc. 2011–9829 Filed 4–21–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64305; File No. SR–Phlx– 

2011–51] 

Self-Regulatory Organizations; 

NASDAQ OMX PHLX LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Relating to 

Alpha Index Options 

April 18, 2011. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on April 14, 

2011, NASDAQ OMX PHLX LLC (‘‘Phlx’’ 

or ‘‘Exchange’’) filed with the Securities 

and Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Fee Schedule to create fees for options 

overlying NASDAQ OMX Alpha 

Indexes SM (‘‘Alpha Indexes’’).3

While changes to the Fee Schedule 

pursuant to this proposal are effective 

upon filing, the Exchange has 

designated these changes to be operative 

on April 18, 2011. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://nasdaqtrader.com/ 

micro.aspx?id=PHLXfilings, at the 

principal office of the Exchange, and at 

the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

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22742 Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Notices 

4Options on the Alpha Indexes will be available 

for trading on the Exchange on April 18, 2011. The 

Exchange will list and trade Alpha Index options 

only on the following Alpha Pairs: AAPL/SPY, 

AMZN/SPY, CSCO/SPY, F/SPY, GE/SPY, GOOG/ 

SPY, HPQ/SPY, IBM/SPY, INTC/SPY, KO/SPY, 

MRK/SPY, MSFT/SPY, ORCL/SPY, PFE/SPY, 

RIMM/SPY, T/SPY, TGT/SPY, VZ/SPY and WMT/ 

SPY. See Securities Exchange Act Release No. 

63860 (February 7, 2011), 76 FR 7888 (February 11, 

2001) (SR–Phlx–2010–176). The Alpha Pairs are 

represented by the following symbols: AVSPY, 

ZVSPY, CVSPY, FVSPY, LVSPY, UVSPY, HVSPY, 

IVSPY, JVSPY, KVSPY, NVSPY, MVSPY, OVSPY, 

PVSPY, RVSPY, YVSPY, XVSPY, VVSPY, WVSPY 

(’’Alpha Symbols’’). 

5A Singly Listed Option means an option that is 

only listed on the Exchange and is not listed by any 

other national securities exchange. 

6Section III of the Fee Schedule includes options 

overlying currencies, equities, exchange-traded 

funds (‘‘ETFs’’), exchange-traded notes (‘‘ETNs’’), 

indexes and Holding Company Depository Receipts 

(‘‘HOLDRS’’). 

7All other indexes would be assessed the fees in 

Sections II and III, respectively, depending on 

whether the index is Singly Listed or Multiply 

Listed. For purposes of this filing, a Multiply Listed 

security means an option that is listed on more than 

one exchange. 

8 15 U.S.C. 78f(b). 

9 15 U.S.C. 78f(b)(4). 

10The Exchange incurs costs for maintaining the 

proprietary index as well as marketing expenses to 

develop this new product. Also, by way of example, 

in analyzing an obvious error, the Exchange would 

have additional data points available in establishing 

a theoretical price for a Multiply Listed option as 

compared to a Singly Listed option, which requires 

additional analysis and administrative time to 

comply with Exchange rules to resolve an obvious 

error. 

11See Securities Exchange Release Act No. 64096 

(March 18, 2011), 76 FR 16646 (March 24, 2011) 

(SR–Phlx–2011–34). 

12See CBOE’s Comment Letter dated June 21, 

2010 to the Proposed Amendments to Rule 610 of 

Regulation NMS, File No. S7–09–10. CBOE further 

noted that options exchanges expend considerable 

resources on research and development related to 

new product offerings and options exchanges incur 

large licensing costs for many products. 

13 If the Exchange determines to increase the 

pricing for options overlying Alpha Indexes at a 

later date, the Exchange would file a proposal with 

the Commission. 

14The Exchange defines a ‘‘professional’’ as any 

person or entity that (i) is not a broker or dealer in 

securities, and (ii) places more than 390 orders in 

listed options per day on average during a calendar 

month for its own beneficial account(s) (hereinafter 

‘‘Professional’’). 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange has prepared summaries, set 

forth in sections A, B, and C below, of 

the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The purpose of the proposed rule 

change is to create new fees titled 

‘‘Alpha Index Options’’ to support 

options overlying certain NASDAQ 

OMX Alpha IndexesTM (‘‘Alpha 

Indexes’’) as well as offer discounted 

pricing to encourage members and 

member organizations to trade options 

overlying Alpha Indexes.4

The Alpha Indexes will trade on the 

Exchange as a Singly Listed Option.5

The Exchange proposes to add these 

fees to Section II of the Fee Schedule 

titled ‘‘Singly Listed Options.’’ 6

Specifically, the Exchange is proposing 

to assess the following fees on options 

overlying Alpha Indexes: 

Customer Professional 

Specialist, 

ROT, SQT 

and RSQT 

Firm Brokerdealer 

Alpha Index Options ............................................................ $0.15 $0.20 $0.00 $0.20 $0.20 

The proposed fees for Alpha Indexes 

would apply to Alpha Pairs/Alpha 

Symbols which have been filed to list 

and trade on the Exchange.7 In addition, 

Customer executions with average daily 

volume of 1,000 Customer contracts or 

more in a calendar month would be 

assessed $0.10 per contract. The 

Exchange believes that this Customer 

discount should encourage member 

organizations to offer options on Alpha 

Indexes to their customers. 

While changes to the Fee Schedule 

pursuant to this proposal are effective 

upon filing, the Exchange has 

designated these changes to be operative 

on April 18, 2011. 

2. Statutory Basis 

The Exchange believes that its 

proposal to amend its Fee Schedule is 

consistent with Section 6(b) of the Act 8

in general, and furthers the objectives of 

Sections 6(b)(4) and 6(b)(5) of the Act 9

in particular, in that it is an equitable 

allocation of reasonable fees and other 

charges among Exchange members and 

other persons using its facilities. 

The Exchange believes that the 

proposed fees for Alpha Indexes are 

equitable, reasonable and not unfairly 

discriminatory because the Exchange is 

seeking to recoup the operational and 

development costs associated with the 

Alpha Indexes product, a proprietary 

product of the Exchange, while also 

encouraging members and member 

organizations to trade Alpha Indexes by 

assessing lower fees and offering a 

Customer volume discount.10 It is also 

reasonable and equitable to offer 

Customers a volume discount on trading 

options overlying Alpha Indexes 

because Customer order flow will 

provide increased liquidity to the 

market and benefit all participants. 

The Exchange has previously stated 

that it incurs higher costs for Singly 

Listed options as compared to Multiply 

Listed options.11 The Chicago Board 

Options Exchange, Incorporated 

(‘‘CBOE’’) noted in a comment letter 

dated June 21, 2010, that CBOE relies 

upon fees to recoup licensing costs 

incurred on options products that use 

third-party proprietary indexes as 

benchmarks (such as the S&P 500®), and 

to generate returns on its investments 

for its own popular proprietary products 

(such as The CBOE Volatility Index®

(‘‘VIX®’’) Options).12 The Exchange 

agrees with CBOE’s position and while 

the Exchange continues to assert that 

Singly Listed products incur higher 

costs and therefore market participants 

should be assessed higher fees as 

compared to Multiply Listed products, 

the Exchange is proposing to assess 

lower fees for the Alpha Indexes, and to 

offer a Customer volume discount, as a 

means to promote this new infant index 

product.13

The Exchange believes that the 

proposed fees for Alpha Indexes are 

equitable because all market 

participants would be assessed lower 

fees for transacting Alpha Indexes as 

compared to other Singly Listed 

indexes. Specifically, Customers would 

be assessed $0.15 per contract to 

transact Alpha Indexes as compared to 

$0.35 per contract for other Singly 

Listed index options. Professionals,14

Firms and Broker-Dealers would be 

assessed $0.20 per contract as compared 

to $0.45 per contract for all other Singly 

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Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 / Notices 22743 

15A Specialist is an Exchange member who is 

registered as an options specialist pursuant to Rule 

1020(a). 

16A Registered Options Trader (‘‘ROT’’) includes 

a Streaming Quote Trader (‘‘SQT’’), a Remote 

Streaming Quote Trader (‘‘RSQT’’) and a Non-SQT 

ROT, which by definition is neither a SQT or a 

RSQT. A ROT is defined in Exchange Rule 1014(b) 

as a regular member or a foreign currency options 

participant of the Exchange located on the trading 

floor who has received permission from the 

Exchange to trade in options for his own account. 

See Exchange Rule 1014 (b)(i) and (ii). 

17An SQT is defined in Exchange Rule 

1014(b)(ii)(A) as an ROT who has received 

permission from the Exchange to generate and 

submit option quotations electronically in options 

to which such SQT is assigned. 

18A RSQT is defined Exchange Rule in 

1014(b)(ii)(B) as an ROT that is a member or 

member organization with no physical trading floor 

presence who has received permission from the 

Exchange to generate and submit option quotations 

electronically in options to which such RSQT has 

been assigned. An RSQT may only submit such 

quotations electronically from off the floor of the 

Exchange. 

19The Exchange market maker category includes 

Specialists (see Rule 1020) and ROTs (Rule 

1014(b)(i) and (ii), which includes SQTs (see Rule 

1014(b)(ii)(A)) and RSQTs (see Rule 1014(b)(ii)(B)). 

20See Exchange Rule 1014 titled ‘‘Obligations and 

Restrictions Applicable to Specialists and 

Registered Options Traders.’’ 

21See CBOE’s Fees Schedule. 

22See CBOE’s Fees Schedule. CBOE has a sliding 

scale for its proprietary products whereby 

transaction fees are reduced when a Clearing 

Trading Permit Holder reaches certain volume 

thresholds in multiply listed options on CBOE in 

a month. 

23 15 U.S.C. 78s(b)(3)(A)(ii). 24 17 CFR 200.30–3(a)(12). 

Listed index options. Specialists,15

Registered Options Traders,16 SQTs,17

and RSQTs 18 (collectively ‘‘market 

makers’’) 19 would be assessed no fees 

for transacting Alpha Indexes as 

compared to the $0.35 per contract fee 

such market makers are assessed for all 

other Singly Listed index options. 

The Exchange believes that it is 

equitable and not unfairly 

discriminatory to assess lower fees to 

Customers because all market 

participants benefit from Customer 

order flow. The Exchange also believes 

that offering discounted pricing to 

Customers for transacting 1,000 or more 

options overlying Alpha Indexes further 

provides benefits to both Customers and 

other market participants. The Exchange 

believes it is reasonable, equitable and 

not unfairly discriminatory to assess a 

Professional, Firm and Broker-Dealer a 

per contract fee of $0.20 per contract for 

transacting Alpha Indexes because the 

Exchange is assessing all market 

participants, except Customers and 

market makers, the same rate to transact 

Alpha Indexes. The Exchange believes 

that the price differentiation between 

market makers as compared to 

Professionals, Firms and Broker-Dealers 

is justified and not unfairly 

discriminatory because market makers 

have obligations to the market, which 

do not apply to Firms, Professionals and 

Broker-Dealers.20 Obligations, such as 

quoting obligations, are critical to 

ensure there is sufficient liquidity in 

new options classes. 

The Exchange believes that the 

proposed fees are reasonable and not 

unfairly discriminatory because the fees 

are consistent with price differentiation 

that exists today at all option exchanges. 

For example, CBOE assesses different 

rates for certain proprietary indexes as 

compared to other index products 

transacted at CBOE. VIX options and 

The S&P 500® Index options (‘‘SPXSM’’) 

are assessed different fees than other 

indexes.21 In addition, the concept of 

offering a volume discount to 

incentivize order flow is not novel.22

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Act.23 At any time 

within 60 days of the filing of the 

proposed rule change, the Commission 

summarily may temporarily suspend 

such rule change if it appears to the 

Commission that such action is 

necessary or appropriate in the public 

interest, for the protection of investors, 

or otherwise in furtherance of the 

purposes of the Act. If the Commission 

takes such action, the Commission shall 

institute proceedings to determine 

whether the proposed rule should be 

approved or disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–Phlx–2011–51 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–Phlx–2011–51. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 

10 a.m. and 3 p.m. Copies of the filing 

also will be available for inspection and 

copying at the principal office of the 

Exchange. All comments received will 

be posted without change; the 

Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

All submissions should refer to File 

Number SR–Phlx–2011–51 and should 

be submitted on or before May 13, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–9774 Filed 4–21–11; 8:45 am] 

BILLING CODE 8011–01–P 

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